What Is Market Cap in Crypto? Circulating Supply, FDV and Why Price Alone Misleads
"Shiba Inu is only ₹0.001, so it can easily go to ₹1!" You'll hear things like this a lot. They come from looking at price alone. Market cap is the number that shows how big a coin really is, and it explains why a ₹0.001 coin isn't necessarily cheap.
The formula
Market cap = price × circulating supply
If a coin trades at $100 and 10 million coins are in circulation, its market cap is $1 billion. That's roughly the total value of all the coins people can currently buy and sell. Coin rankings on CoinWhisk and most trackers are sorted by market cap.
Why price alone misleads
Two coins can have very different prices but the same market cap:
| Coin | Price | Supply | Market cap |
|---|---|---|---|
| Coin A | $50,000 | 20,000 | $1 billion |
| Coin B | $0.001 | 1 trillion | $1 billion |
Both are the same size. For Coin B to reach $1, its market cap would have to grow to $1 trillion, a 1,000x increase. A low price usually just means there are a huge number of coins.
You can test this for any coin with the market cap calculator. For example, see Shiba Inu's price if it reached Ethereum's market cap, or Solana at Bitcoin's market cap.
Circulating, total and max supply
- Circulating supply: coins that exist and are available to trade now. This is what market cap uses.
- Total supply: all coins created so far, including any locked by the team, investors or a treasury.
- Max supply: the most that will ever exist. Bitcoin's is 21 million. Some coins, like Ethereum, have no fixed maximum.
Fully diluted value (FDV)
FDV is the price multiplied by the max supply, or the total supply if there's no max. It shows what the market cap would be if every coin were in circulation at today's price.
A big gap between market cap and FDV is worth noticing. It means many coins are still to be released, often to early investors or the team. As they unlock and get sold, they can put pressure on the price.
Market cap isn't money invested
A $1 billion market cap doesn't mean $1 billion was put into the coin. It's just the last trade price multiplied by every coin. If lots of holders tried to sell at once, the price would fall well before they all got out. That's why 24-hour trading volume matters too. A coin with a big market cap but tiny volume can be hard to sell without moving the price.
How to use market cap
- Compare coins by market cap, not price. Use Compare coins to see two side by side, for example Bitcoin vs Ethereum.
- Be sceptical of "this coin will reach $X" claims. Check what market cap that price would need.
- Look at the circulating vs max supply on each coin page.
For information only, not investment advice.